We use microlevel data on employers and employees from a sample of establishments in four major metropolitan areas in the United States to investigate whether Affirmative Action leads to the hiring of minority or female employees who are less qualified. Our measures of qualifications include the educational attainment of the workers hired and a variety of outcome measures related to worker performance on the job. We find evidence of lower educational qualifications among women and minorities hired under Affirmative Action. However, we do not find evidence of weaker job performance among most groups of minority and female Affirmative Action hires.

We update the evidence on changes in job stability through the mid‐1990s, using recently released Current Population Survey data for 1995 that parallel earlier job tenure supplements. In the aggregate, job stability declined modestly in the first half of the 1990s. Moreover, the relatively small aggregate changes mask rather sharp declines in stability for workers with more than a few years of tenure. Nonetheless, the data available to this point do not support the conclusion that the downward shift in job stability for more tenured workers, and the more modest decline in aggregate job stability, reflect long‐term trends.

We use a unique new data set that combines data on individual workers and their employers to estimate marginal productivity differentials among different types of workers. We then compare these to estimated relative wages, leading to new evidence on productivity‐based and nonproductivity‐based explanations of the determination of wages. Among our findings are (1) the higher pay of prime‐aged workers (aged 35–54) and older workers (aged 55+) is reflected in higher point estimates of their relative marginal products, and (2) for the most part, the lower relative earnings of women are not reflected in lower relative marginal products.

In Lazear's model of long‐term incentive contracts, age discrimina‐tion laws barring age‐ based involuntary terminations preclude such contracts, reducing efficiency. Alternatively, such laws may serve as precommitment devices for these contracts, without pre‐venting firms from offering strong financial incentives to induce retirement at specific ages. In this case, age discrimination laws may encourage Lazear contracts, hence increasing efficiency. We assess evidence on these alternative interpretations using variation in state and federal age discrimination laws. The evidence indicates that age discrimination laws steepen age‐earnings profiles for co‐horts entering the labor market, suggesting that these laws encour‐age the use of Lazear contracts.